Front cover
Smarter Banking, Horizontal Integration, and Scalability
Redguides
for Business Leaders
Claus T Jensen
Understand the importance of horizontal
integration for smarter banking
Achieve end-to-end process visibility in a
non-invasive fashion
Re-invent the classical mainframe as a modern
process-aware platform
Executive overview
Today's economies and commodity markets are swinging rapidly, barriers to global
competition are disappearing, and empowered customers are changing preferences and
expectations faster than businesses can respond. Historically, banking processes have been
bounded by the IT systems that drive them, and integration has been implemented through
batch processing and data warehousing. Though adequate from a transaction processing
perspective, this approach does not cater to the emerging need for horizontal integration of
business processes.
From a horizontal integration perspective what becomes critical is end-to-end visibility and
optimization, an integrated user experience, and a robust and scalable integration
environment. It is imperative that the classical finance industry computing environments (such
as mainframes) evolve to embrace these capabilities. Re-designing decades of existing
solutions is not a viable approach, so how do we achieve end-to-end process visibility and
optimization in a non-invasive fashion? The answer is that the computing environment itself,
(CICS®, IMS™ and so forth) must provide capabilities (such as business event processing
and integration on the glass) in a holistic fashion across vertical solution towers.
Note: The concept of integration on the glass means that the user can mash together
various user interface components for a particular purpose without needing to change the
underlying functionality.
By re-inventing the classical mainframe as a modern process-aware platform, it becomes a
full-fledged participant in environments based on architecture paradigms such as
service-oriented architecture (SOA), Web 2.0, and event-driven architecture. Merging the
classical mainframe virtues with modern architecture flexibility combines the best of both
worlds and provides a natural evolutionary path for the valuable portfolios of existing finance
solutions.
This IBM® Redguide™ publication describes the principles for smarter banking from a
business perspective, and discusses how to evolve existing environments towards a smarter
banking paradigm. The primary audiences are executives, leaders, and architects that need
to understand how to make use of classical finance industry computing environments as
smarter banking differentiators.
© Copyright IBM Corp. 2010. All rights reserved.
1
The need for smarter banking
Today we are witnessing an acceleration of market shifts. Economies and commodity markets
are swinging rapidly, barriers to global competition are disappearing, and customers are
changing preferences and expectations faster than businesses can respond. At the same
time, personal, organizational and business networks are becoming more interconnected,
instrumented and intelligent. Our planet is literally becoming smarter. This new world
presents tremendous opportunities, but to capture them, financial companies must embrace
the concept of smarter banking, as defined in Figure 1.
INSTRUMENTED
+
A smarter financial system
stipulates that products are
decomposed and
managed at the atomic
level, allowing the
participants to measure,
control, sense and respond
quickly and precisely
based on a “single source
of truth.”
+
A smart financial institution is
built on systems that
advance processing to better
automate transactions with
counterparties, partners and
suppliers to enable
innovation across the value
chain.
Smarter
Figure 1 Smarter banking
2
INTELLIGENT
INTERCONNECTED
Smarter Banking, Horizontal Integration, and Scalability
A smart financial institution
enables the rapid, intelligent
analysis of a vast mix of
structured and unstructured
data to improve insight,
enable informed judgment
and fight abuse.
Banking
Too often businesses find themselves restrained from meeting these imperatives by siloed
processes and rigid IT systems that inhibit collaboration and slow the process of change. In
fact, as illustrated in Figure 2, inflexible and complex operations in many cases prohibit
financial companies from focusing on their clients in a holistic fashion.
Payments
Processing
Anti-Money
Laundering
Account
Opening
Compliance
Reporting
Processes
Customers
Partners
Regulators
3rd Party
Service
Providers
Figure 2 Siloed processes and rigid IT systems
Clearly, smarter banking solutions need to become more instrumented, interconnected, and
intelligent. How do we achieve that goal without disruptive change?
Historically, banking processes have been bounded by the IT systems that drive them.
Integration has been implemented through batch processing and data warehousing. While
adequate from a transaction-processing perspective, this approach does not cater to the
need for horizontal integration of business processes. Horizontal transaction processing is the
ability to define and manage long-running business processes in a transactional fashion,
horizontally orchestrating the valuable portfolios of existing finance solutions.
From a horizontal integration perspective, three capabilities are critical:
򐂰 End-to-end visibility and optimization
򐂰 Integrated user experience
򐂰 Robust and scalable integration environment
Whether based on a classical mainframe platform or hosted in a distributed environment, any
modern banking solution must provide all three capabilities, embracing technologies and
standards such as Web services, process orchestration, business event processing, Web 2.0
and so forth. Most of these have already been enabled in CICS Transaction Server. A similar
evolution is occurring on other traditional computing platforms.
3
End-to-end process visibility
Process improvements have been the primary concern of many CEO's for several years.
Studies (such as the recent McKinsey survey and analysis of 100 companies in France,
Germany, UK and the US) show that aligning business and IT efforts results in double the
productivity gains of those efforts made in isolation. Smarter banking requires more than
simple alignment of efforts, however. It requires a deep understanding of the business
processes of the enterprise, as well as the ability to execute change on these processes in
collaboration between business and IT.
Re-designing decades of existing solutions is not a viable approach to process improvement.
So how do we achieve end-to-end process visibility and optimization in a non-invasive
fashion? We need to enable businesses to understand what is happening soon enough to
make a difference. There are two aspects of such understanding:
򐂰 Business event processing
Providing timely visibility into the state and progress of business processes
򐂰 Integration on the glass
Providing a user-oriented view point with just enough information to make appropriate
decisions
Both of these aspects must be provided by the horizontal integration environment in a holistic
fashion across all vertical solution towers.
An event-aware enterprise processes event information continuously for business insight and
action. The evolution towards an event-aware enterprise is illustrated in Figure 3.
2010
Business Event Processing (BEP)
Detect, correlate and respond to business
situations for early and intelligent insight
2000
Business Process Management (BPM)
Provides a flexible architectural style in support of efficient
process change, deployment and orchestration, empowering
business and IT people to more effectively collaborate,
1990
Applications: ERP/CRM
Discrete, data oriented, processing for nondifferentiating, transactional processes.
Figure 3 Evolution of the event-aware enterprise
The ability to instrument existing solutions, allowing them to emit business events without
disruptive change, is a critical enabler for the event-aware enterprise. An example of how this
can be done is the recently-added business event capturing capabilities in IBM CICS
Transaction Server, where the operating system automatically collects and filters events
without any change to that application. After the existing solutions are instrumented, we can
collect the emitted events and use them to drive horizontal business processes and support
intelligent decisions.
4
Smarter Banking, Horizontal Integration, and Scalability
When the necessary operational visibility is in place, the next step is to provide the right
information in the right context, and tailored to individual user needs. The concept of a
mashup originated with Web 2.0 as an on the glass heterogeneous integration of information,
functionality, and user interface. A mashup by its nature provides a horizontally integrated
user experience, as illustrated in Figure 4.
Web
Platforms
Portal/portlets
Web
Domino
WebSphere Application
Server
Google Gadgets
Enterprise Applications
Connections
Commerce
ERP
Quickr
Enterprise Information
CICS Transaction
Server
<WSDL>
WebSphere MQ
Web services
CRM
ECM
Legacy
JDBC DB
Info Server
IMS
Figure 4 On the glass horizontal integration
Existing solutions running on a multitude of different technology platforms need to expose
themselves as mashable resources. This is not an easy task because many of these solutions
were not built for such integration. The only non-invasive way of achieving the desired result is
by having middleware and infrastructure transparently expose existing information sources
and transactions in a mashable format that can be understood by whatever Web 2.0
environment has been deployed. This is exactly the purpose of the recent Web 2.0
enablement of data on IBM CICS.
When end-to-end process visibility is achieved, the foundation is in place for process
improvement both in terms of current operations and in terms of process re-engineering.
Without process visibility as a pre-requisite, any process improvement is partly guess-work. In
many cases the business processes inherent in existing solutions are not documented
anywhere, hence the need to be discovered before they can be improved.
5
Robust and scalable information systems
Process improvement inevitably leads to change. Yet smarter banking is not just about
change itself. Smarter banking is about embracing change and retaining the classical virtues
of well-managed enterprises. IBM white paper Achieving business agility with BPM and SOA
together1 introduces the notion of business agility, business performance, and business
integrity as the three key differentiators for today's enterprises. IBM believes that to succeed,
smarter banking needs to be based on robust and scalable information systems that ensure
business performance and business integrity. If not, business execution suffers.
Transactional strength in information systems (the ability to execute and manage large
numbers of concurrent transactions both consistently and efficiently) has been around longer
than the concept of smarter banking. Yet, from a smarter banking perspective, how do we
mirror vertical enterprise solution characteristics in a horizontal business integration domain?
When properly executed, (horizontal) process improvement relies on the robustness and
scaling characteristics of the classical enterprise platform. In other words, the classical
computing environments of the finance industry need to position themselves in support of
horizontal transaction processing. In fact, merging the classical mainframe virtues with
modern architecture flexibility combines the best of both worlds and provides a natural
evolutionary path for the valuable portfolios of existing finance solutions. It is important to
realize that there is no value to the business if optimized processes are not reliable, can not
scale to the demands of use, or leave critical business information vulnerable to corruption or
misuse. Maintaining business performance and integrity in the face of change requires a
reliable, adaptable, and scalable environment, both technologically and organizationally.
The organizational scalability aspect is particularly interesting from a positioning perspective.
In many cases, the specialized skill requirements for mainframe environments have been
used as an argument against their continued viability as a strategic platform. Yet the skill
requirements are really related to the available development and management tools, and not
related to the underlying transactional strength of the platform itself. With the emergence of
next generation tooling for the mainframe platform (such as IBM CICS Explorer™) this
argument for perceiving the mainframe as an old-school platform disappears.
References
Refer to the following resources for more information:
IBM white paper, Achieving business agility with BPM and SOA together - Smart work in the
smart Enterprise, Claus T Jensen, Rob High, Jr., Steve Mills, 2009
https://www14.software.ibm.com/webapp/iwm/web/signup.do?lang=en_US&source=sw-app&S
_PKG=achagilbpm&S_TACT=108AY1MW
IBM white paper, BPM and SOA require robust and scalable information systems – Smart
work in the smart enterprise, Claus T Jensen, Rob High, Jr., Steve Mills, 2009
https://www14.software.ibm.com/webapp/iwm/web/signup.do?source=sw-app&S_PKG=natsyn
&S_TACT=108AY2NW&soc=all
[McKinsey]: London School of Economics, McKinsey survey and analysis of 100 companies
in France, Germany, UK and the US
1
6
IBM white paper, Achieving business agility with BPM and SOA together - Smart work in the smart enterprise,
Claus T Jensen, Rob High, Jr., Steve Mills, 2009
https://www14.software.ibm.com/webapp/iwm/web/signup.do?lang=en_US&source=sw-app&S_PKG=achagilbpm
&S_TACT=108AY1MW
Smarter Banking, Horizontal Integration, and Scalability
Summary
Successfully scaling a smarter banking initiative requires careful thought and consideration.
From an organizational perspective the enterprise needs horizontal visibility as well as
appropriate skills to manage the business and IT operational environments. From a
technological perspective the enterprise needs to establish a platform that scales with the
success of the smarter banking initiative and ensures the integrity and reliability of business
processes and services.
Though much is being said in the market place about the need for business agility, the
complementary need for business visibility, robustness, and scalability is often understated
and undervalued. Agile change at the cost of operational excellence is a fragile value
proposition at best. To ensure success, smarter banking needs to be based on transparent,
robust, and scalable information systems. If not, business execution suffers.
Providing end-to-end process visibility on a high performance horizontal transaction
processing platform is a key differentiator for successful enterprises in their drive toward
smarter banking. To that end, the scalable integrated tools and infrastructure offered by IBM
are built to support transaction processing fundamentals, providing a good starting point and
a solid foundation for the future.
The team who wrote this guide
This guide was produced by a specialist working at the IBM European Products and Solution
Support Center (PSSC), Montpellier, France, in collaboration with the IBM International
Technical Support Organization (ITSO) Poughkeepsie center.
Claus T Jensen is a Senior Technical Staff Member on the SOA Foundation team. The SOA
Foundation team has architectural responsibility for all IBM software products to ensure that
they support the key principles of SOA from a client perspective. This role requires both broad
and deep expertise on SOA concepts and practical use. Claus is the Chief Architect of
Architectural synergies and life cycles, driving the alignment between SOA, Business Process
Management, and Enterprise Architecture, as well as the interlock between SOA and
Information Management. Prior to joining IBM in March 2008, Claus was Group Chief
Architect, VP of Architecture and Business Development, for Danske Bank, a regional
European bank. He was responsible for driving Danske Bank's SOA initiative and SOA center
of excellence since its inception in 1999. Claus holds a PhD in Computer Science from
Aarhus University, Denmark.
Thanks to the following people for their contributions to this project:
Nigel Williams, Certified IT specialist
IBM PSSC, Montpellier Center
Peter Beevers, Client IT Architect
IBM UK
Chris Rayns, ITSO Project Leader
IBM Poughkeepsie
Anthony Papageorgiou, CICS Developer
IBM Hursley
7
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© Copyright IBM Corp. 2010. All rights reserved.
9
This document, REDP-4625-00, was created or updated on June 11, 2010.
®
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Other company, product, or service names may be trademarks or service marks of others.
10
Smarter Banking, Horizontal Integration, and Scalability